Lincoln MoneyGuard LTC/Life

[SlowMovingInvestor]

I mentioned being interested in LTC policies to a financial 'advisor' and received a pitch/term sheet for Lincoln Moneyguard's LTC/Life policy. FWIW, I have a MyGA coming due in a few months and would like to roll it over into another insurance/annuity product for deferral purposes.

The numbers are complicated enough that I can't analyze them easily. I'm not at all inclined to purchase a hybrid policy. I see reviews for this particular policy on bogleheads are poor. But for my own education, I'm curious about specific bad points in these policies.

I know my 'advisor' is suggesting it because she would make a good commission on it, but I want to reject it as politely as possible. What specifically could I mention as negatives and reasons for rejecting it (I know I don't have to give a reason)?

ADDED: Also, for my education,

1) The policy mentions Inflation Option: 5%. Does that mean the LTC benefit would increase by 5% each year?
2) There is an Initial Specified Amount, which is around 85% of the planned premium. What diffence is there between these two?

[I also need to decide what to do with the MyGA when it comes due, but that's several months away. ]

[Parkinglotracer]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

[JoeRetire]

I know my 'advisor' is suggesting it because she would make a good commission on it, but I want to reject it as politely as possible. What specifically could I mention as negatives and reasons for rejecting it (I know I don't have to give a reason)?

Something like "Thank you. I have decided I don't want to purchase a hybrid policy." is polite.

1) The policy mentions Inflation Option: 5%. Does that mean the LTC benefit would increase by 5% each year?

Yes.

2) There is an Initial Specified Amount, which is around 85% of the planned premium. What diffence is there between these two?

No idea, but a good question for your 'advisor'.
Explaining terms is something any good advisor will happily do.

[Ed 2]

Insurance get sold , investments get bought.

[UpperNwGuy]

Don't get into a debate about specific bad points of these policies. The salesperson always wins those arguments because this is what they do for a living. Just say no and don't engage in any discussion of particulars.

[Chardo]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

Not to debate the case for or against LTC, hybrid plans like Moneyguard do not have rate increases. What you buy is what you get. Your lump sum (in some cases spread over a few years) buys X dollars for long term care or a death benefit if unused. All specified in the contract.

[Parkinglotracer]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

Not to debate the case for or against LTC, hybrid plans like Moneyguard do not have rate increases. What you buy is what you get. Your lump sum (in some cases spread over a few years) buys X dollars for long term care or a death benefit if unused. All specified in the contract.

Thank you.

[Rex66]

This is bc hybrids are either annuities or permanent insurance policies with a rider and not vanilla ltci policies. Even with all the rate increases, you get more ltci per dollar out of straight vanilla policies. Frankly the industry wants to sell you hybrids bc they have mastered making money on them.

[Stinky]

I mentioned being interested in LTC policies to a financial 'advisor' and received a pitch/term sheet for Lincoln Moneyguard's LTC/Life policy. FWIW, I have a MyGA coming due in a few months and would like to roll it over into another insurance/annuity product for deferral purposes.

Many good points made previously about how bad a combo life insurance / LTC product is for your financial health. I won’t repeat those.

From a practical point of view, you can’t 1035 exchange from an annuity to a life insurance product. You can go from life to annuity, but not annuity to life.

So you would lose the tax deferral if you trade in a MYGA for a life insurance policy.

In my view, if your “advisor” pitched the Moneyguard idea to you knowing that you wanted to maintain tax deferral, he committed financial malpractice. I would drop that advisor like a hot potato.

[Kaizen Soze]

Tell your advisor no because it's too complicated for you to understand. If they push back, say there are too many moving parts and you like to keep things simple.

[Chardo]

This is bc hybrids are either annuities or permanent insurance policies with a rider and not vanilla ltci policies. Even with all the rate increases, you get more ltci per dollar out of straight vanilla policies. Frankly the industry wants to sell you hybrids bc they have mastered making money on them.

You get more for your dollar, if you go on claim. If you die without ever needing care, you get nothing. Hybrids guarantee a benefit, generally more than you paid in. Therefore a hybrid will provide less per dollar for care than a standalone would. It's a tradeoff, one that could be either more or less appropriate for different people. The industry wants to sell hybrids because there is more certainty. They know how to price them more accurately and profitably.

[Chardo]

I mentioned being interested in LTC policies to a financial 'advisor' and received a pitch/term sheet for Lincoln Moneyguard's LTC/Life policy. FWIW, I have a MyGA coming due in a few months and would like to roll it over into another insurance/annuity product for deferral purposes.

Many good points made previously about how bad a combo life insurance / LTC product is for your financial health. I won’t repeat those.

From a practical point of view, you can’t 1035 exchange from an annuity to a life insurance product. You can go from life to annuity, but not annuity to life.

So you would lose the tax deferral if you trade in a MYGA for a life insurance policy.

In my view, if your “advisor” pitched the Moneyguard idea to you knowing that you wanted to maintain tax deferral, he committed financial malpractice. I would drop that advisor like a hot potato.

Is that what the advisor was suggesting? I was not clear on that when reading the OP. I thought the MYGA was a separate thing. If this post is about a recommendation to 1035 a MYGA to Moneyguard, well, I hope the agent paid his E&O premium. Actually, Lincoln probably wouldn't even accept the application.

[Rex66]

This is bc hybrids are either annuities or permanent insurance policies with a rider and not vanilla ltci policies. Even with all the rate increases, you get more ltci per dollar out of straight vanilla policies. Frankly the industry wants to sell you hybrids bc they have mastered making money on them.

You get more for your dollar, if you go on claim. If you die without ever needing care, you get nothing. Hybrids guarantee a benefit, generally more than you paid in. Therefore a hybrid will provide less per dollar for care than a standalone would. It's a tradeoff, one that could be either more or less appropriate for different people. The industry wants to sell hybrids because there is more certainty. They know how to price them more accurately and profitably.

You practically get nothing as well with the hybrids as well if no claim. Like you implied not much more than you paid in so nothing. They keep all the profit. If you go on claim then they use all your money up first. I’m not sure if it’s still true (probably isn’t bc of rate increases) but you could buy a no lapse gUL and a straight ltci and be cheaper for similar benefits.

Yes that’s what I said about the industry. It’s a better deal for them.

[neilpilot]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

I find the 5 points you list above almost precisely why I almost didn't buy our current LTC policies. However, we decided to buy coverage anyway and it turned out to be a bargain. Our LTC policies were purchased way back in 1999, when we were 49, and included a 5% inflation rider. The inflation rider pegs the total coverage and daily coverage maximums in 2023 at about 3-4x the 1999 coverage limits.

Back then Hartford, as well as the other companies writing LTC coverage, grossly underestimated life expectancy so they underpriced coverage. Unlike many other insureds holding older LTC policies, our policy information indicated a fixed premium and we continue to pay the same annual premium we paid back in 1999. We were just lucky.

[Parkinglotracer]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

I find the 5 points you list above almost precisely why I almost didn't buy our current LTC policies. However, we decided to buy coverage anyway and it turned out to be a bargain. Our LTC policies were purchased way back in 1999, when we were 49, and included a 5% inflation rider. The inflation rider pegs the total coverage and daily coverage maximums in 2023 at about 3-4x the 1999 coverage limits.

Back then Hartford, as well as the other companies writing LTC coverage, grossly underestimated life expectancy so they underpriced coverage. Unlike many other insureds holding older LTC policies, our policy information indicated a fixed premium and we continue to pay the same annual premium we paid back in 1999. We were just lucky.

Congrats for getting a policy with a locked in premium and inflation hedge!

[SlowMovingInvestor]

This is bc hybrids are either annuities or permanent insurance policies with a rider and not vanilla ltci policies. Even with all the rate increases, you get more ltci per dollar out of straight vanilla policies. Frankly the industry wants to sell you hybrids bc they have mastered making money on them.

You get more for your dollar, if you go on claim. If you die without ever needing care, you get nothing. Hybrids guarantee a benefit, generally more than you paid in. Therefore a hybrid will provide less per dollar for care than a standalone would. It's a tradeoff, one that could be either more or less appropriate for different people. The industry wants to sell hybrids because there is more certainty. They know how to price them more accurately and profitably.

Thanks to everyone for all their comments.

However, I don't really need Life Insurance (even term, let alone cash value). I am primarily interested in pricing a pure LTC policy to see whether it makes sense to get it or to self-insure. The insurance industry might prefer to sell a hybrid product, but I see it as something I don't need that just complicates evaluation and comparison with other products.

This particular policy does provide a death benefit. But it mentions a monthly LTC benefits rider charge and says that this will be deducted from the gross cash value (i.e., it's not an additional premium). I assume this reduces the death benefit.

In any case, the complexity deters me. I could ask the advisor for more clarification, but I'd honestly rather not take up his time when my interest level in a hybrid is low.

[SlowMovingInvestor]

I mentioned being interested in LTC policies to a financial 'advisor' and received a pitch/term sheet for Lincoln Moneyguard's LTC/Life policy. FWIW, I have a MyGA coming due in a few months and would like to roll it over into another insurance/annuity product for deferral purposes.

Many good points made previously about how bad a combo life insurance / LTC product is for your financial health. I won’t repeat those.

From a practical point of view, you can’t 1035 exchange from an annuity to a life insurance product. You can go from life to annuity, but not annuity to life.

So you would lose the tax deferral if you trade in a MYGA for a life insurance policy.

In my view, if your “advisor” pitched the Moneyguard idea to you knowing that you wanted to maintain tax deferral, he committed financial malpractice. I would drop that advisor like a hot potato.

Is that what the advisor was suggesting? I was not clear on that when reading the OP. I thought the MYGA was a separate thing. If this post is about a recommendation to 1035 a MYGA to Moneyguard, well, I hope the agent paid his E&O premium. Actually, Lincoln probably wouldn't even accept the application.

I mentioned to the advisor that I was interested in LTC care. I also mentioned that I had a MYGA coming due. I did think my MYGA payout might be used to pay the premium on this policy, but the advisor didn't suggest it, nor did I specifically ask it. So I wouldn't hold him responsible for what I may have inferred.

But it's useful to know the inability to rollover from a MYGA - it makes my purchase of this policy even less likely.

[Chardo]

So a standalone policy is more appropriate for you than a hybrid. It's nice to have a variety of solutions available for everyone.

Just to be clear, while that product is technically a life insurance policy, you're really not buying life insurance in the true sense. The "life insurance" is basically a return of premium, so if you die without ever needing care, you didn't waste your money. The rider charge and all that other complicated stuff is rather irrelevant to the purchase. You are buying the specified benefit, for the specified premium, all guaranteed.

FYI, there are annuity-based hybrid products that do allow rollovers and 1035 exchanges to fund them. Moneyguard is not one of them. This could be a good option for some people.

[smitcat]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

I find the 5 points you list above almost precisely why I almost didn't buy our current LTC policies. However, we decided to buy coverage anyway and it turned out to be a bargain. Our LTC policies were purchased way back in 1999, when we were 49, and included a 5% inflation rider. The inflation rider pegs the total coverage and daily coverage maximums in 2023 at about 3-4x the 1999 coverage limits.

Back then Hartford, as well as the other companies writing LTC coverage, grossly underestimated life expectancy so they underpriced coverage. Unlike many other insureds holding older LTC policies, our policy information indicated a fixed premium and we continue to pay the same annual premium we paid back in 1999. We were just lucky.

Congrats for getting a policy with a locked in premium and inflation hedge!

We have them as well - but we needed to talk to a bunch of sale folks back at the time we were interested in them.
Our payments were partially offset as a cost in our business until this year ....now it appears they will be partially offset by the new tax rules in secure 2.0.

[Parkinglotracer]

You are too nice.

Reasons why I don’t buy LTC insurance

1) the insurance is very expensive
2) the insurance company has written the complicated terms and conditions to statistically attempt to make sure they win and you lose
3) when the companies start to lose money on these policies (as has been the case for many insurers), they have raised the rates and that forces one to pay the increased premium or lose coverage (and all your previous premiums are water under the bridge)
4) and I don’t like pushy salesmen / women
5) I can insure myself

I was eligible for buying federal LTC insurance but decided not to for the reasons above.

Will blue print income and the other on line sites from our forum recommendation, don’t they beat the rates you can get from the Lincoln MYGA annuity salesman? I would think they would and that way you can avoid the salesman selling LTC policies,

Good luck.

I find the 5 points you list above almost precisely why I almost didn't buy our current LTC policies. However, we decided to buy coverage anyway and it turned out to be a bargain. Our LTC policies were purchased way back in 1999, when we were 49, and included a 5% inflation rider. The inflation rider pegs the total coverage and daily coverage maximums in 2023 at about 3-4x the 1999 coverage limits.

Back then Hartford, as well as the other companies writing LTC coverage, grossly underestimated life expectancy so they underpriced coverage. Unlike many other insureds holding older LTC policies, our policy information indicated a fixed premium and we continue to pay the same annual premium we paid back in 1999. We were just lucky.

Congrats for getting a policy with a locked in premium and inflation hedge!

We have them as well - but we needed to talk to a bunch of sale folks back at the time we were interested in them.
Our payments were partially offset as a cost in our business until this year ....now it appears they will be partially offset by the new tax rules in secure 2.0.

Excellent I hope it pays off in spades if you need it!

[Rex66]

So a standalone policy is more appropriate for you than a hybrid. It's nice to have a variety of solutions available for everyone.

Just to be clear, while that product is technically a life insurance policy, you're really not buying life insurance in the true sense. The "life insurance" is basically a return of premium, so if you die without ever needing care, you didn't waste your money. The rider charge and all that other complicated stuff is rather irrelevant to the purchase. You are buying the specified benefit, for the specified premium, all guaranteed.

FYI, there are annuity-based hybrid products that do allow rollovers and 1035 exchanges to fund them. Moneyguard is not one of them. This could be a good option for some people.

except thats pretty much a half truth at best. You give them money. 30 years later they give it to you back. That money would have doubled two or 3 times otherwise and agents and companies never seem to keep that in mind. Nope no waste there. You didnt miss out on anything. Very efficient from an agent commission point of view for sure at least. You really need to go on claim almost immediately and for a long period of time for it to work out well financially which is rare bc of underwriting standards. Then if you actually need LTC they use all of your actual money up first before kicking in any insurance company funds so really many people are self funding but using a horrible growth instrument even worse than typical permanent insurance. Years ago when moneyguard came out there was an excellent review of it by an agent over at fatwallet but unfortunately that forum got bought out and disappeared. There were actually though other ltci agents who would show how a stand alone was much better but unfortunately the writing was on the wall and almost all of them are now hybrid fans. Funny how you will change your point of view when dinner is on the line. It will be interesting to see what happens if interest rates continue to rise. Could easily see the day again where you can buy a no lapse gUL and a stand alone for cheaper/more benefit. The industry wants hybrids bc its better for them.

[SlowMovingInvestor]

So a standalone policy is more appropriate for you than a hybrid. It's nice to have a variety of solutions available for everyone.

Just to be clear, while that product is technically a life insurance policy, you're really not buying life insurance in the true sense. The "life insurance" is basically a return of premium, so if you die without ever needing care, you didn't waste your money. The rider charge and all that other complicated stuff is rather irrelevant to the purchase. You are buying the specified benefit, for the specified premium, all guaranteed.

FYI, there are annuity-based hybrid products that do allow rollovers and 1035 exchanges to fund them. Moneyguard is not one of them. This could be a good option for some people.

Thanks for the response.

The policy does mention a death benefit, although it goes down yearly until it equals the premium (while the LTC max benefit goes up). I think the death benefit goes down for any LTC benefits that are paid out until it reaches a minimum (which I presume is meant to cover funeral expenses).

What hybrid products allow 1035 exchanges to them? I know SPIAs and other MYGAs do, but do some of those have LTC benefits?

[tomsense76]

I mentioned being interested in LTC policies to a financial 'advisor' and received a pitch/term sheet for Lincoln Moneyguard's LTC/Life policy. FWIW, I have a MyGA coming due in a few months and would like to roll it over into another insurance/annuity product for deferral purposes.

Many good points made previously about how bad a combo life insurance / LTC product is for your financial health. I won’t repeat those.

From a practical point of view, you can’t 1035 exchange from an annuity to a life insurance product. You can go from life to annuity, but not annuity to life.

Am definitely not an insurance expert (like you), not a lawyer, nor any other financial expert.

However came across this from AALTCI:

Under the new rules of Internal Revenue Code Section 1035(a) (as established by Section 844(b) of the Pension Protection Act), individuals can complete a "like-kind" exchange from an insurance or annuity policy directly to a qualified long-term care insurance policy. The new law stipulates that the long term care insurance policy must be a "tax qualified" policy as defined under IRC Section 7702B. Today, the vast majority of policies meet these criteria. The rules also stipulate that the annuity policy must be non-qualified annuity. These are generally defined as annuities purchased with after-tax funds (as opposed to IRAs or retirement annuities that are purchased with pre-tax dollars).

Looking up the law am not seeing the "(b)" part, but did find Section 844:

(Sec. 844) Excludes from gross income any charge against the cash value of an annuity contract or the cash surrender value of a life insurance contract made as payment for coverage under a qualified long-term care insurance contract which is part of or a rider on such annuity or life insurance contract if the investment in the contract is reduced (but not below zero). Requires an individual excluding such charges from gross income to file a return with the Secretary of the Treasury.

So maybe there is more to this? Though please feel free to correct me (am just trying to understand as well ).

[Stinky]

I mentioned being interested in LTC policies to a financial 'advisor' and received a pitch/term sheet for Lincoln Moneyguard's LTC/Life policy. FWIW, I have a MyGA coming due in a few months and would like to roll it over into another insurance/annuity product for deferral purposes.

Many good points made previously about how bad a combo life insurance / LTC product is for your financial health. I won’t repeat those.

From a practical point of view, you can’t 1035 exchange from an annuity to a life insurance product. You can go from life to annuity, but not annuity to life.

Am definitely not an insurance expert (like you), not a lawyer, nor any other financial expert.

However came across this from AALTCI:

Under the new rules of Internal Revenue Code Section 1035(a) (as established by Section 844(b) of the Pension Protection Act), individuals can complete a "like-kind" exchange from an insurance or annuity policy directly to a qualified long-term care insurance policy. The new law stipulates that the long term care insurance policy must be a "tax qualified" policy as defined under IRC Section 7702B. Today, the vast majority of policies meet these criteria. The rules also stipulate that the annuity policy must be non-qualified annuity. These are generally defined as annuities purchased with after-tax funds (as opposed to IRAs or retirement annuities that are purchased with pre-tax dollars).

Looking up the law am not seeing the "(b)" part, but did find Section 844:

(Sec. 844) Excludes from gross income any charge against the cash value of an annuity contract or the cash surrender value of a life insurance contract made as payment for coverage under a qualified long-term care insurance contract which is part of or a rider on such annuity or life insurance contract if the investment in the contract is reduced (but not below zero). Requires an individual excluding such charges from gross income to file a return with the Secretary of the Treasury.

So maybe there is more to this? Though please feel free to correct me (am just trying to understand as well ).

Yes, you’re correct that you can exchange from an annuity into a stand alone LTC policy.

But that’s not what OP was asking about. He was asking about the Lincoln MoneyGuard product, which is a life insurance product with a LTC rider. To my knowledge, one can’t exchange from an annuity into a life insurance policy.

[tomsense76]

Yes, you’re correct that you can exchange from an annuity into a stand alone LTC policy.

But that’s not what OP was asking about. He was asking about the Lincoln MoneyGuard product, which is a life insurance product with a LTC rider. To my knowledge, one can’t exchange from an annuity into a life insurance policy.

Gotcha ok. Thanks for the correction!

So if OP decided they wanted some qualified LTC plan (not this plan, which is not a qualified LTC plan), they could use their MYGA to purchase it if they chose to and exclude that from taxable income. Did I understand that correctly?

Asking also as I was reading up on MYGA's recently and happened upon both this post and the AALTCI result in the same search. Had thought annuities could not be exchanged for insurance (thought it only worked the other way around). So was a bit surprised to see one could go from an annuity to insurance in this case.